Delhi District Court
Kendriya Vihar Apartment Owner Welfare ... vs Satish Kumar And Ors on 23 December, 2025
OMP (COMM.) 26/23
KENDRIYA VIHAR APARTMENT OWNER WELFARE
ASSOCIATION Vs. SATISH KUMAR AND ORS
IN THE COURT OF SH. DEVENDER KUMAR JANGALA
DISTRICT JUDGE(COMMERCIAL COURT)-01, NORTH WEST DISTRICT
ROHINI COURTS, DELHI.
OMP (COMM.) 26/23
KENDRIYA VIHAR APARTMENT OWNER WELFARE
ASSOCIATION Vs. SATISH KUMAR AND ORS
KENDRIYA VIHAR APARTMENT OWNERS
WELFARE ASSOCIATION (KVAOWA)
SECTOR-56, GURGAON, HARYANA-122011
THROUGH ITS PRESIDENT/SECRETARY .... Objector
DEVENDER
VERSUS KUMAR
JANGALA
1. SH. SATISH KUMAR Digitally signed
S/o Sh. Tara Chand by DEVENDER
KUMAR
R/o H.No.48, New Roshanpura, JANGALA
Date: 2025.12.23
Near Jaideep Public School,
16:43:17 +0530
Najafgarh, New Delhi-110043
2. SH. DEEPAK BHANWALA
(Ld. Sole Arbitrator)
Signus Arbitration Chambers, C-1/11,
LGF, West Enclave, Pitampura, Delhi-110034
And
Also, at:
Chamber No.1330,
Lawyers' Chamber Block,
Rohini Courts Complex, Delhi-110085
3. REGISTRAR, DELHI ARBITRATION CENTRE (DAC),
(Nodal Institutional Arbitration Center as per Arbitration
& Conciliation Act, 1996)
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OMP (COMM.) 26/23
KENDRIYA VIHAR APARTMENT OWNER WELFARE
ASSOCIATION Vs. SATISH KUMAR AND ORS
Room/Chamber No: X-5a,
Civil Wing, Tis Hazari Courts Complex, Delhi-110054
4. Micro and Small Enterprises Facilitation Council,
(MSEFC) Distt. South-West,
Office of the District Magistrate (South-West) GNCTD,
Old Terminal Tax Building Kapashera, New Delhi-110037
......Respondents
Date of filing of petition : 21.02.2023
Date of arguments : 16.12.2025
Date of judgment : 23.12.2025
JUDGMENT
1. Vide this judgment, I shall decide the objection petition under Section 34 of the Arbitration and Conciliation Act, 1996 seeking setting aside the arbitral award dated 15.10.2022 passed by Sh. Deepak Bhanwala, Ld. Sole Arbitrator passed in MSEFC Case no.DL/10/M/SWC/00797 of 2022.
2. Arguments on this petition advanced by Sh. Lal Singh and Sh. Anil Kumar, Ld.counsel for the petitioner/objector and Sh.Rajat Chaudhary, Ld.counsel for respondent already heard. Record perused.
3. The Ld. Counsel for the Petitioner contended that the very reference of the dispute to the Micro and Small Enterprises Facilitation Council and the consequent arbitration proceedings are without jurisdiction and contrary to the provisions of the Micro, Small and Medium Enterprises Development Act, 2006. It was urged that Respondent No.1 was not registered as a Micro or Small Enterprise at the time of entering into the contract nor during the execution and completion of the work, and therefore could not have invoked the machinery under Sections 17 and 18 of the MSMED Act.
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4. It was further submitted that the subject work order was awarded on 06.11.2018 and stood completed on 31.05.2018, whereas Respondent No.1 obtained registration as a Micro Enterprise under the MSMED Act only on 26.11.2021, i.e., much after the completion of the contractual work. In such circumstances, the benefits of the MSMED Act could not have been availed retrospectively, and Respondent No.1 did not fall within the definition of a "supplier" under Section 2(n) of the Act during the relevant transaction period.
5. Learned counsel for the Petitioner further argued that the Respondent No.1 had suppressed material facts before the Facilitation Council as well as before the learned Arbitrator by not disclosing that it was not registered under the MSMED Act at the relevant time. It was contended that such suppression vitiated the very assumption of jurisdiction by the Facilitation Council and rendered the entire arbitral process legally unsustainable.
6. Before adverting to the merits of the rival submissions, it becomes necessary to examine whether the foundational objection raised by the Petitioner, namely, the absence of jurisdiction of the Micro and Small Enterprises Facilitation Council and the learned Arbitrator on account of non-registration of Respondent No.1 under the MSMED Act at the relevant time, goes to the root of the matter. Since this objection strikes at the very competence of the forum and the validity of the arbitral process itself, the same warrants consideration at the threshold, prior to examining any other factual or contractual disputes between the parties.
7. The issue as to whether an enterprise which was not registered under the MSMED Act at the time of entering into the contract, but obtained registration during the subsistence of the contract, would thereafter be entitled to the benefits of the MSMED Act, was initially examined by the Hon'ble Supreme Court in Silpi 3/6 OMP (COMM.) 26/23 KENDRIYA VIHAR APARTMENT OWNER WELFARE ASSOCIATION Vs. SATISH KUMAR AND ORS Industries v. Kerala State Road Transport Corporation, reported as 2021 (18) SCC
790. While the said decision recognized that the Act could apply to an entity duly registered under the MSMED Act, the Hon'ble Supreme Court did not conclusively determine whether such benefits could be availed where registration was obtained during the continuance of an existing contract. This specific issue was subsequently considered and authoritatively settled by the Hon'ble Supreme Court in Gujarat State Civil Supplies Corporation Ltd. v. Mahakali Foods Pvt. Ltd., reported as 2023 (6) SCC 401. The Hon'ble Supreme Court observed as under:-
" 51. Following the abovestated ratio, it is held that a party who was not the "supplier" as per Section 2(n) of the MSMED Act, 2006 on the date of entering into the contract, could not seek any benefit as a supplier under the MSMED Act, 2006. A party cannot become a micro or small enterprise or a supplier to claim the benefit under the MSMED Act, 2006 by submitting a memorandum to obtain registration subsequent to entering Into the contract and supply of goods or rendering services. If any registration is obtained subsequently, the same would have the effect prospectively and would apply for the supply of goods and rendering services subsequent to the registration. The same cannot operate retrospectively. However, such Issue being jurisdictional Issue, if raised could also be decided by the Facilitation Council/Institute/Centre acting as an Arbitral Tribunal under the MSMED Act, 2006.
xxx A party who was not the "supplier" as per the definition contained In Section 2(n) of the MSMED Act, 2006 on the date of entering into contract cannot seek any benefit as the "supplier" under the MSMED Act, 2006. If any registration is obtained subsequently the same would have an effect prospectively and would apply to the supply of goods and rendering services subsequent to the registration."
8. The Hon'ble Delhi High Court has given a similar decision in Malani Construction Company v. Delhi International Arbitration Centre & Ors., 2023 SCC OnLine Del 1665 while taking help of authoritative judgments of Silpi Industries (Supra) and Gujarat State Civil Supplies Corporation Ltd (Supra) observed as under:
"14. The ratio of these two judgments is clear to the effect that if the registration under the MSMED Act, 2006 was obtained subsequently, the benefits under the said Act would not apply.4/6
OMP (COMM.) 26/23 KENDRIYA VIHAR APARTMENT OWNER WELFARE ASSOCIATION Vs. SATISH KUMAR AND ORS Even in a situation where some portion of the goods/services are supplied prior to registration and some are supplied post registration, the Act would apply, depending on the facts, only qua the goods and services which are supplied subsequent to the registration."
9. In view of the above case law passed by the Hon'ble Supreme and Delhi High Court, it is clear that a dispute prior to the registration under MSMED Act cannot be referred to MSME Arbitration under Section 17 and 18 of the Act. Any registration obtained subsequent to the execution of the contract would have only prospective effect and cannot confer jurisdiction retrospectively upon the facilitation counter or the arbitral forum constituted under MSME Act. The dispute arising out of the contract enter into between the parties prior to such registration cannot be referred to the Arbitration under Section 18 of the MSME Act. Hence, the issues to the eligibility to invoke the provisions of MSME Act goes to the root of the matter.
10.It is admitted fact that the claimant / respondent herein was not registered under the MSME Act during the subsistance of the contract, at the time of execution of completion of the work. The claimant / respondent no.1 has obtained the registration only on 26.11.2021 i.e. much after the completion of the contractual work. Therefore, it is clear that reference for arbitration made to the MSME Facilitation Council and the consequential arbitration proceedings before the respondent no.2 / Ld. Arbitrator were void ab-initio for want of jurisdiction.
11.In view of the above, the impugned award dated 15.10.2022 is liable to be set aside having emanated from a form lacking inherent jurisdiction. Accordingly, the Impugned Award dated 15.10.2022 passed by Sh. Deepak Bhanwala, Ld. Sole Arbitrator is set aside. The claimant / respondent no.1 is at liberty to avail the appropriate remedy for redressal of his grievances, as per provisions of other applicable laws.
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12.File be consigned to record room on completion of necessary formalities.
( Devender Kumar Jangala ) District Judge (Commercial Court)-01 North-West, Rohini, Delhi.
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